How Free Is Trade?

Guest Column Payal Parekh

The governments of 34 nations in the Americas are currently negotiating the Free Trade Area of the Americas (FTAA) agreement. The purpose of the agreement is to liberalize trade, services, and investments between the nations.

Since 1994, the nations have been negotiating the agreement in a secretive, undemocratic manner. While businesses have been involved from the beginning, civil society has not had an avenue for participation. The next summit is scheduled in Quebec City from April 20-22 to discuss a draft text. The governments hope to finish negotiations between 2003 and 2005.

It is expected that the FTAA will be an expansion of the North American Free Trade Agreement (NAFTA), an agreement between Canada, United States, and Mexico enacted in 1994. While corporations have benefited from these free trade agreements, many other sectors of society, including peasants, laborers, and women, have not. For example, industrial wages have decreased by 10 percent in Mexico. In the United States, between 200,000 and 1 million jobs have been lost. The 1997 “Latino Review of NAFTA” found that Latinos, African Americans and women are overrepresented in jobs lost due to NAFTA. In addition, NAFTA gave corporations the right to sue governments. Under this provision, a U.S. firm, Metalclad, sued the Mexican state of San Luis Potosi because the governor of the state ruled that a hazardous waste dump could not be constructed on land to which Metalclad had bought the rights. A NAFTA tribunal, which consists of three trade experts who meet privately, decided that San Luis Potosi would have to pay Metalclad $16.7 million in compensation fees. If a corporation’s ability to do business is lost, the losing country must pay compensation or change the law. Therefore, national laws that exist to protect the public are in jeopardy.

It is expected that the FTAA will look to expand World Trade Organization (WTO) rules to privatize services such as health care and education, as well as further liberalize trade and investments, similar to the demands of Structural Adjustment Programs administered by the International Monetary Fund (IMF). For example, at the IMF’s urging, the city of Cochabamba, Bolivia privatized the city’s water system. This resulted in a rise in water prices between 40 and 400 percent. Due to protests and outcry from the public, the Cochabamba government was forced to rescind the contract.

It is also expected that countries will not be able to give preference to domestic providers, and once access is granted to investors/corporations from any one FTAA country, the same access must be granted to investors/corporations from all FTAA countries. U.S. intellectual property rights (patents) must also be recognized in all FTAA countries. This would most likely mean an end to Brazil’s successful program of government laboratories making generic versions of expensive drugs for AIDS patients.

The FTAA will also curtail a town, city or state’s ability to pass resolutions to restrict the purchase of environmentally unsound products. For example, if a town decides that it will not purchase genetically engineered foods, this action could be considered illegal under the FTAA. It can be considered a non-tariff trade barrier, as the town is discriminating against a product based on how it was produced. Thus, the FTAA further limits the functioning of democracy and makes it difficult to pass laws that protect the public and the environment.

In reality, the FTAA is another way in which the wealthy nations of the west can colonialize Latin America. In fact, workers in Latin America feel the same way. A coalition of trade unions of Mercosur countries called upon their governments to submit the FTAA to national plebiscites, which they believe would result in its defeat. Whether one is from the first world or from the third world, agreements such as the FTAA subject all of us to corporate rule.

But there is hope. Since this agreement hurts nearly every sector of society, it offers the possibility to come together in solidarity to fight the FTAA and create a world that globalizes human need, not corporate greed. Opposition is growing throughout the Americas. Thirty thousand people are expected to be protesting the Summit in Quebec City later this month. Many more thousands are expected to be protesting the irony of free movement of goods and services but not people by protesting at the U.S./Mexico and U.S./Canada border. There will also be local solidarity actions throughout the Americas, including here in Boston. Join the movement to reclaim our lives from globalization!

Payal Parekh is a graduate student in the MIT/WHOI Joint Program in Oceanography.